No re-assessment proceedings beyond 3 years if the escaped income exceeds ₹50 lakh is not represented in the form of an asset
The Delhi High Court in the case of Ratnagiri Gas and Power Private Limited [TS-562-HC-2025(DEL)] recently quashed the reassessment proceedings, inter-alia, on the ground that proceedings initiated beyond 3 years is barred by limitation as conditions laid down under section 149(1)(b) of the Income-tax Act, 1961 were not fulfilled. The Hon’ble Court clarified that the section allows initiation of reassessment proceedings beyond 3 years only if the escaped income exceeds ₹50 lakh representing in the form of an asset. Further, clarified that expenditure towards salaries and wages could not be represented as ‘asset’ as per section 149(1)(b).
The judgment not only protects the rights of the Assessee but also highlights the significance of thorough and accurate reporting to guard against arbitrary reassessment actions beyond prescribed timelines.
The copy of the order is as under:
